Forged In Fire
Hosted by Nate Pharmer-Eden and Cole Farrell, Forged In Fire is where real entrepreneurship meets raw, unfiltered stories. This isn’t your typical business podcast—we skip the fluff and dive straight into the heat of what it really takes to build, run, and grow a business. From late-night doubts to game-changing wins, we explore the trials, setbacks, and breakthroughs that entrepreneurs experience at every stage of their journey.
Whether you’re a seasoned business owner navigating new challenges or someone with a burning desire to launch your first venture, this podcast offers powerful insights and practical lessons for everyone. No sugarcoating—just honest conversations about what it takes to forge success through the fire.
Get ready to be inspired, learn from real-world struggles, and gain the tools you need to make your entrepreneurial dreams a reality. This is your front-row seat to the highs, lows, and everything in between. Are you ready to step into the fire? 🔥
Forged In Fire
Episode 27: The Entrepreneur's Resilience Handbook
Nate and Cole share personal stories of their most challenging real estate moments and how they transformed these potential disasters into opportunities that strengthened their businesses and mindsets.
• Nate recounts managing a duplex that caught fire when a child found a lighter and toilet paper
• The catastrophe led Nate to purchase the property, get his GC license, and transform it into a profitable investment
• Cole details a $150,000 mistake on a 7-unit portfolio caused by misunderstanding commercial appraisal processes
• Despite the refinance failure, the resulting high cash flow became the foundation supporting Cole's entire portfolio
• Both hosts emphasize the importance of having experienced mentors to help catch potential mistakes
• Real estate success requires resilience, adaptability, and viewing obstacles as opportunities for growth
• Learning to pivot when things go wrong is what separates successful entrepreneurs from those who give up
Leave us a comment below with topics you want us to discuss in future episodes. We appreciate your feedback and want to hear from you!
Forget what you've heard. Forged in Fire is where real entrepreneurs come to share the untold truths of success the late nights, the crushing setbacks, the moments that change everything. No fluff, just fire, ready to step into the heat and unlock what it really takes to build a business. This is where legends are made.
Speaker 2:Welcome back, ladies and gentlemen, to another exciting episode of Forced and Fired. I am your co-host, nate Farmer. Aiden Cole, how we doing brother.
Speaker 3:Nate, what's going on, man? How are you doing today? What's going on in your world?
Speaker 2:Man, it's Tuesday. We're testing out this new system. I like it so far, man. It's different, but it's one of those things where it's like you're on a path or kind of like on a trajectory for a while and you realize you don't necessarily need to pivot, but it's time to like upgrade or update or like take it to the next level. And I feel like that's more than just this podcast, like it's all across the board with all the exciting things we've got going on, but it's definitely applicable for right now dude.
Speaker 3:I love that I can relate to them in so many different ways, which we will certainly get into on this episode, specifically with what we're doing, what's's going on, etc. So I'm really excited. I guess I'm going to give you some housekeeping stuff and then we're going to tell you exactly what we're going to do this episode. So, first and foremost, as always, if you guys could do us one single favor, it would really mean a lot. It would help us, it would help us grow, it helps us do these episodes and continue this, which is please, leave us a review so that we can help other people and help educate more. So just that one thing please, pretty please, leave a review, thank you.
Speaker 2:I'm still not used to just the one thing yet, but I love it, I love it. So today is actually going to be just a little bit different, where we're not having a guest, it's just going to be Cole and I we try to do this at least once a quarter where we just let you guys know what's going on in our world. We get tons of different questions all the time from Forge Academy side and just being on social media and just being at real estate meetups, and this is our time to just be able to kind of answer those questions. So, cole, you ready for this?
Speaker 3:I'm ready. Are you going to tell them what's going on, or am I diving in?
Speaker 2:I'll give a brief overview.
Speaker 2:One of the questions that I've received consistently is to talk a little bit about what it was like to sort of transition from something that was you guys hear me reference it a lot where I made a lot of mistakes in real estate, getting started Tens of thousands of dollars, and I hate repeating it, but for some reason you guys ask about, like, how did this happen? And I've taken it to kind of make a paradigm shift to hopefully educate and inspire so that you all don't make the same mistakes. But I wanted to take another step further today to not only say about some of the mistakes that I've made or some of the downfalls or some of the things that have happened, but how we were able to sort of pivot again, bringing that back up from the very beginning, to turn that into something positive instead of just giving up, instead of just saying nah, f, it, screw it, I'm out, this is just not working. Being able to continue to push through, prevail and see the light at the end of the tunnel. So that's what today's episode is about.
Speaker 3:I love it. I love it. All right, dive in.
Speaker 2:Beautiful, beautiful, all right. Dive in beautiful, beautiful, beautiful, all right. So I'm gonna take you guys back to this. Must have been 2020, 2021, um. So, as you guys know, um, I purchased my first piece of real estate in 2017, when I house hacked my first duplex, um, and that had its own trials and tribulations we can get into that on another episode but, um, after a while, it started going really, really well and I was enjoying myself and I actually was in the process of thinking about acquiring another asset, so I was trying to go through the process of saving up enough money to be able to do so. For those that don't know real estate, it's an amazing tool, it's an amazing vessel, but sometimes you can't just live off of cash flow. An amazing vessel, but sometimes you can't just live off of cash flow, and sometimes things happen to where you have to dig into some of your savings and your reserves to be able to make sure that you're able to stay afloat.
Speaker 2:So if you didn't know, Wait what? So, man bro, Okay, An example.
Speaker 3:Oh dude, don't even give one, just keep going, just keep going.
Speaker 2:Just keep going. Oh my gosh, don't even give one. Just keep going, just keep going, just keep going, oh my gosh. Okay, so we'll get to that in another episode. Excuse me, no-transcript.
Speaker 2:Cole and I, we always talk about making connections with banks, making connections with different lenders, making connections with different realtors. Well, him and I had a really good relationship. He was investing in the same neighborhood that I lived in, so literally my backyard. He was an out-of-state investor, right so? Or out-of-town investor, I guess I should say so, an absentee owner. And he's like Nate, I'm getting tired of owning this. I'm getting tired of doing all the maintenance behind. I'm getting tired, just tired. He's like I need a property manager. So he took me out to eat at BW3's Buffalo Wild Wings. We're sitting down. He's like Nate, what would you charge to be able to manage? And I'm like well, my issue right now is that I just need more money. So I don't care, let's figure it out. So he put a number on the table. I'm like, yeah, let's go ahead and do this, this is going to be awesome. So I took all the property another duplex again, it's my backyard, so you get to renting it out. Everything's going perfectly. After all tenants are in place, fast forward like two, three, like three months after. Everything's working out beautifully right. What ends up happening is he's doing some renovations for the lower unit, so it's not rented. But we rented out the top one. The lower unit's just about done. Our plan was to have that rented by December 1st. The date's very important. So he's doing some renovations on the lower unit. The upper unit has got tenants in it.
Speaker 2:I get a call a week before Thanksgiving. December 1 was very important because this is very close to Thanksgiving. I get a call a week before Thanksgiving midnight. I Thanksgiving. I get a call a week before Thanksgiving midnight. I missed it. So the phone flashed. I was trying to go pick it up and I missed it.
Speaker 2:I got a voicemail. All it said was hey, nate, property's on fire. Okay, thanks, bye, what, what? Yeah, that's literally all he said. I'm like oh my gosh. So here I am, throwing on my shoes, throwing on my boots, my coats on, I rush out the door Down the street. I'm flying there. I see like ambulance, fire trucks, all types of stuff. Man, I'm like oh, dude, like what do I tell the owner? So I called him. I left him a message. I'm going to drive there. I'm like, hey, I have no idea what's going on, but I think your property's on fire is from the message that I got so long and the short of what ended up happening with that is everybody was okay, first and foremost. That's most important. Everybody was fine.
Speaker 2:What was explained to me, what was explained to the officers that were on site, is that she was watching a handful of kids. Couple of them were hers. The youngest one found a bed, found toilet paper and found a lighter. A bed, found toilet paper and found a lighter. And the rest was, yeah, the rest was history.
Speaker 2:The whole upper unit went up in flames. The fire department had to knock in all the windows to be able to alleviate all the smoke that was going on. They actually sprayed so much water into the upper unit. Again, this is why December 1st was important, because the lower unit was getting rented December 1st. They sprayed so much water into that unit to be able to put the fire out that we had water coming out of the electrical outlets in the lower unit. So, after all the renovations and everything to be able to get that done, it makes perfect sense, right? So now here we are building's just done.
Speaker 2:I'm like what do I do? He understood so fast forward a couple of weeks, reach back out to the owner. He's like yeah, insurance paid it off, but now I'm in a whole nother issue, nate, and I don't know what to do. I'm like well, what's going on, man? How can I help? What's happening? He's like dude, I'm talking to wholesalers because they're reaching out to me for this building that was on fire and they're lowballing me and I don't know what to do. I'm like lowballing, what do you mean? It's like they're offering me only like $20,000 to $30,000 for this house, and it's worth so much more. It's like I own it outright at this point, just because insurance paid it off, and at this point they got the downstairs unit back up and running with tenants in place. It's like it's worth so much more. I just don't know what to do.
Speaker 2:I'm like okay, so this was that aha moment, to where Cole and I talk about this consistently, trying to create a win-win situation, trying to figure out how you can be able to add value to somebody. And this was my opportunity, this was my moment. I'm like okay, so you want to offload it? You don't want the property anymore, so let me know, what is it that you actually need? What's your bottom line? So he threw a number out there again and I'm like okay, I think I might be able to make this work Now.
Speaker 2:Luckily, this time around for me in real estate, I've got a mentor, I've got a coach and I'm learning. These systems Didn't have it years ago. I had it now. So what I ended up doing was actually I got the property under contract and a wholesale to myself, and I actually found a bank to be able to help me finance the property. So not only do they finance it, but actually, with the wholesale fee, when I went to close I paid myself $2,500 to buy the property.
Speaker 2:And then the bank was like Nate, your SOW stands for Scope of Work, looks amazing. The property will appraise roughly quite a bit more than what it is that you've got under contract. For the moment. You do some work, so we won't have you go through any hard money lending. We will give you all the money at close. So you'll have one check for 2.5 thousand, another check for 80 grand and you can use this at your leisure to make sure that you're doing everything that you need to.
Speaker 2:For the scope of work. I said, ok, so now I'd open up a whole other can of worms where I at this point it's COVID. I'm like I have no idea what I'm doing now, but I've got an upper unit that is down to the studs and I guess I just got to go. So how it ended up ending was I ended up getting my GC license. I became a general contractor in the state of Wisconsin. I ended up getting a couple subs to work underneath me and it was just a learning curve, brother. It was a learning curve like crazy to be able to understand how everything gets put together, what it's like to actually manage contractors from start to finish, but it was awesome.
Speaker 2:By the time we actually wrapped up and we finished off, I took it back to the bank. Bank was like Nate, you blew it out of the park, looks amazing. And the appraisal came back 20k higher. So they gave me a check for 30,000 and was like hey, you own the property. Now we're gonna put a mortgage on it for 1219 still only to this day where I've got the upper unit rented for 1300, the lower use at the lower units at $1,400, again with a mortgage for less than $1,250. So it was one of those situations where I thought the world was ending because I had no idea what to do and I was placing the blame on myself. But I was able to kind of pivot and yeah, so to prevail, and now the property is thriving. So that's my lesson and my story behind. Hey, just got to see things through and try to look at things from all angles.
Speaker 3:All right, I got questions. So at some point in that whether it was when the building was on fire or when you got the call, or when you're kind of figuring out what to do, or whatever it is did you at any point feel like you shouldn't do this? That, like you're like this might be a crazy risk, this might be a mistake, like I'm out of my mind that is a phenomenal question and I'm gonna answer that with a big hell.
Speaker 2:yes, brother, I I had these moments all the way through, brother, and not only then. Like I'm like probably managing for myself and all the stuff that I went through, uh, a struggle. But now it's like one of those situations where you're stepping into somebody else's and now you're like am I fit for it? Do I deserve to be here? He entrusted me. Where did I go wrong? But at some point you got to have that mindset shift, man. You got to have that mindset shift. And again it really hit me, and I don't know if the proper term is like that imposter syndrome. But what really hit me was after we started trying to figure out what the win-win was. And then I'm like, hey, I figured this is a good move, I think you'll be able to pull it off, but it's like I don't know, I've never done something like this. Like, do I test the limits? Do I actually just go? So that's my long answer to your short question. Like, yes, I had a lot of doubt in my mind at some points.
Speaker 3:No, I love it. I think that's important. The reason I want to ask that is I think a lot of people hear some of these stories and they're like, yeah, that makes sense, good for you, you know you did the thing. And they're not recognizing that like we're all scared, shitless at first and that's just part of the process. And then we made a cognitive choice to do something different and to like go towards it, not just like, yeah, I'm fine, I'll figure it out. Like yeah, we have that mindset, but it's not like that's ingrained, like you have to force that and learn it and then you know, believe it. So not on the real estate side.
Speaker 2:But what did that whole process let's say everywhere, from start to finish teach you about yourself? Oh dude, that's a great question. Number one is that I've realized over the years and again not just real estate specific that I'm very stubborn, and I guess the better word for that is resilient I guess that's what the cool kids are now calling it To where I put my mind that I could do something.
Speaker 2:That's not the same thing but continue, hey, hey, hey, now you calm down over there. I'm trying to put this positive spin on it, right? So I'm very stubborn. I get to the point where I'm like I made my mind up and nothing is going to stop me from doing it Even my own personal doubts, which we just talked about to where it was like I'm second guessing myself, I'm wondering, I'm questioning everything, I'm like you know what? Okay, we're just going to go. So, wondering, I'm questioning everything, I'm like you know what? Okay, we're just going to go.
Speaker 2:So I think that's one of the biggest things that I kind of realized about myself and that I can, I have more resources at my disposal than I realized initially, right, one of the biggest things for me when I was getting started again, not just real estate specific, but not only am I stubborn about some of the things and I kind of set in my ways, but I often get too nervous to try to ask for help, and that was a struggle for me through elementary, through middle high school, hell.
Speaker 2:I was a struggle in undergrad and graduate school I'm not going to lie to you, brother, like where I'm. Just I'm one of those people where I'm like I can figure this out. I don't know if I want to ask for help. I don't. I don't know if, again, one of those situations where I don't want to be a burden to somebody uh, Nate, just fucking do it, figure this shit out where it's literally a conversation can save it. And that's bringing it out in full circle, literally one of the reasons we're doing this episode, talking about losing money and all the types of BS that we've been through, to say, hey, sometimes you just gotta listen, ask for help, take advice and then go ahead and move forward. Again, my answer to your short question.
Speaker 3:No, I love it so good. I'm trying to think if I got another follow-up to that.
Speaker 2:No, you don't. No, it's your turn.
Speaker 3:We're ending this, this suit. Don't try to get out of this shit. I like it, all right, I'll give you one. This is one that I think about all the time, and it was like a blessing disguise, like all these stories, um, usually turn out to be. But when I got started, um, I bought a duplex. All's well and good.
Speaker 3:I'm not going to go into that Different time, but anyways, I did this duplex, I figured it out, all was awesome, and I thought I was hot, shit, I got this duplex. I'm cash flowing, I'm young. I figured it out, yada, yada. And so I met this guy and he was like, hey, I'm selling this stuff, do. And so it was a seven-unit portfolio, right. And so it's four houses sorry, five houses and then a duplex all right around the block from each other, and I think we're buying at like $90,000 a unit, and the numbers made sense, they worked. And so I was like, absolutely, I did this first one. It looks great, this one makes sense, awesome. And so I didn't have the money, obviously. So I was like you know, I'm basically a teenager at the time still, and I'm like where am I going to come up with whatever hundreds of thousands of dollars to buy this, because when you're buying it right, you need a certain amount of money down. This was no seller finance deal, and so we did get a mortgage. We did get approvals. There's all these hurdles that you normally go through, and so I faced this with. I'm going to figure this out. I figured that first one out, I can figure this one out, and so I did which is awesome and got it done. I ended up partnering with somebody who financed the acquisition, not the reno, and the deal was they financed the acquisition in its entirety, up to closing.
Speaker 3:We use all the cashflow from the property to pay for the renovations ongoing. I do the work, I do the labor, and then we split everything afterwards 50-50, but only after we refinance. And they pull all their money back out and then we split it right. So it makes sense. They put the money in. I do all the work, I put in the sweat equity, and then they pull their capital out and then we split it 50-50. They put capital in, I put sweat equity in. Everyone comes out clean. We split it right. Great plan Makes sense. So we do it. We buy it and there were little learning curves. So the whole objective with this was buy it, renovate, increase value, sell right.
Speaker 3:So went in, renovated the first unit and I'll have you know. Thank God I had construction experience prior to this because I thought I knew what I was doing with that duplex. When I started it I didn't know what I was doing and so, thankfully, I had some education prior to this, where I worked with a management company and I learned so much how to do plumbing, how to install cabinets, how to install flooring properly, how to fix the tub, how to re-glaze, everything you could think of. So I was blessed where I got that experience and I could do all these things without hiring outside help. And so did it and did the first unit and it was tough. Did the second unit and it took I don't know six months maybe, which in the grand scheme, is not long. I mean, that was my full-time job and it's funny because I wasn't even making cash flow off of it. I was still working on the side just trying to like make ends meet, and I would do property management during the day and then I would go do renos all night and it was brutal days, but it's part of the game and the point was, um, I completed the project.
Speaker 3:Everything was nice, hunky-dory, the units were done, um, and I went to refi and I'm like this is gonna do great. I'm looking at the numbers here. I'm like, all right, we got seven units. Noi is high because because quick refresher if our NOI we say our NOI divided by cap rate on income approach properties, that gives you value right. So, for instance, if you have $100,000 in NOI, you divide that by your cap rate, you get X value. So I'm looking at these properties and we're cash flowing fantastic. We did so well and rents were high. Everything was awesome.
Speaker 3:So go to the bank, go for a refi and the appraisal comes back and it was completely different than what I thought. And I don't mean the numbers, I mean it was the numbers, but I mean the entire approach was wrong. From what I understood, I was told that if you have seven units you're in commercial right, so that it goes by income approach. Nope, sorry, wrong. I have five houses which are comparables and then I have a duplex which is still a comp, and so everything ran on comps which did not support my income numbers. My income numbers were way higher than my whole project was based on and the comps were dramatically lower.
Speaker 3:So not only could we not pull out nearly enough money, but we basically broke even pretty much, and so it was such a humiliating process to make such a glaring mistake. My investor was pissed because then now they have to stay in the deal. Thankfully, they decided not to sell, we didn't leave and just get out of it, but they decided to stay in the deal and then we would just cash flow and go from there and pausing there, that's a failure, thought it was going good, I didn't know what I didn't know and made all these mistakes, thought I was doing it right, and you just have one piece of wrong info that happens to be catastrophic and your entire plan goes to shit. However, where the triumph comes in is what do you do with that Right? So at that point my investor's mad Everything's kind of we own it, but we took no money out, and there's all these issues and kind of sitting back just going, wow, that's like what do you do now?
Speaker 3:I got no money, I don't have an investor, I can't grow, you know what happens. And lo and behold, because we pulled so much less out, our cashflow is dramatically higher, and so I've been able to use that cash flow to support everything that I've done in my entire portfolio up to this point. I could not be building what I'm building, I could not be doing what I'm doing if I didn't have that cash flow to rely on that as a base. And so it might just be like a perspective shift, but having that kind of understanding of okay, well, I was dealt this, I made, made this mistake, now let's transfer to this and make something out of it was kind of like the difference, I guess.
Speaker 2:Holy shit, oh my gosh. Okay, so many questions, but pause. I just want to say I've known you for years and we talk all the time, but to be able to to hear it in real time. Dude, you are going through it, brother, holy cow.
Speaker 3:It's a $150,000 mistake.
Speaker 2:Oh my gosh dude. Okay, so let's back this up. Let me back it up a little bit. So when you were in the process of doing the renovations and I know you had a little bit of that for a background when you were doing property management and all that so what was that process like? Did you just like have units that were occupied and then you'd vacate one and then just work on it, or what was that process?
Speaker 3:Yeah. So when we looked at it, it was we have seven units and I need to renovate all those, right? But I'm one person and the deal is I'm doing the work, so I can't renovate seven units at the same time. That would be stupid. So units at the same time, that would be stupid. So one, they'd be empty, and two, I literally can't work at all. Seven, right? So what do you do? Well, you just do one at a time.
Speaker 3:So we took the most problematic resident and followed by the lowest income producing property, and then we would either evict them, tell them to vacate or some combination, but we'd get them out and then we'd go and do that unit. And then where I was smart with this and kind of planned ahead was the other units that I had. Some of them were good residents and so we offered them to the current residents. So I have a beautifully renovated unit. Now that's done. And my goal isn't to get the highest amount of money it is, but it's also to get these units done fast as possible. So we'd have one of our current residents. We'd say, hey, there's gonna be a rent increase, but you can move into this renovated unit because you've done well, you've already done everything, so jump over, and so we had probably half of the people do that, which was awesome. So we had a couple people that we do evict and go through, and we had a couple that just moved over and we just go one by one, by one.
Speaker 2:Jesus. So I know we're wrapping here, but what advice would you give somebody that's either just jumping in or potentially faced with one of these kind of conundrum kind of situations, and how would you tell them? I don't know if you would say something about mindset or if you would say something about. I want you to just let me know what advice would you give somebody that's just jumping in so just what would I say to somebody like getting into this to avoid that situation?
Speaker 2:you mean just or how to deal with it yeah, that's exactly it, because you said it was 150 000. So what would you tell somebody?
Speaker 3:I mean, you need help, right, that's the first thing. You need somebody on your side. I don't always mean paid coaches, I don't always mean somebody that's a buddy, I mean somebody that's done this, that you can talk to and run your stuff by like a mentor, an experienced investor, just somebody. You need somebody in your corner. Basically is what I'm trying to say that you can talk through the stuff that catches things like that, because I didn't right and that should have been a very simple thing that was caught and it wasn't. But if I had the right people around me, somebody would have brought up hey, you're that plan. That's not right. Then here's why let's go into that. So that's one thing.
Speaker 3:Another thing that I was lucky with is I was always instilled with kind of the mindset of you're gonna figure it out, make do and just move on. The mistake's a mistake, you can't change it. Now, keep going. And so I would advise the same thing is shit's gonna happen, it's gonna go wrong, things that you can't possibly predict, and or things that you can predict and still screw up and so just accept that it's going to have problems, things are going to go wrong and you're just going to fix it and deal with it, because that's all you can do. So you can't just sit inside, you can't just dive in expecting to know everything. Just dive in.
Speaker 2:Mic drop. You guys hear me on every episode. I got to do it for this guy here You're listening, pause, rewind, play this entire segment all the way back. Man, so many gems, so many nuggets dropped, and it's just two guys, two guys. I'm younger than Cole now Wink, wink, but I'm younger than Cole, right? So, with that being said, we started out and we had issues. We ran into issues, we're still running into issues, but we just as Cole said, you figure it out. You're going to have F-ups, you're going to have mistakes, but what you decide to do and how you decide to pivot and how you decide to move forward and overcome those obstacles, that's what's going to separate you from everybody else.
Speaker 2:This channel here Forged in Fire. This is what we talk about Entrepreneurship, entrepreneurial spirit. We talk about growth. We talk about mindset. We talk about development. We talk about being able to try to take yourself and elevate yourself to the next level. That's exactly how we started this episode when we initially kicked it off trying new software, trying new programs, trying new platforms, trying to expand, trying to grow, all of the things right.
Speaker 2:And we want to make sure that you guys are doing the exact same things. We're human, everybody makes mistakes, but what are you going to do about it? How are you going to move forward and how are you going to learn from those lessons? So, for those that are tuning in no-transcript. So if you want more from us, you want to hear more from us. We have a new feature as well. Make sure that you check down below, underneath the show notes, we have a place for you to be able to write us a letter, leave a comment, reach out to us, let us know other topics that you want us to discuss, hate mail all of it, any of it.
Speaker 2:Just do what you got to do to get a contact with us. We're around but, with that being said, you're driving. Get home safe. We'll talk to y'all in the next one. Take care, everybody.
Speaker 1:Peace thanks for tuning in to another episode of Forged in Fire. If you enjoyed today's raw, unfiltered stories, don't forget to like, subscribe and leave us a review. Your feedback helps us bring more real-world insights to entrepreneurs like you. Be sure to join us next time for even more lessons, struggles and breakthroughs on the road to success. Keep forging ahead.